ICICI shares under pressure ahead of Q4 results; what to watch

In the previous three-quarters, ICICI Bank has witnessed a continuous decline in net profits and a rise in provisions and gross non-performing assets resulting in a significant deterioration in asset quality and weak net interest income (NII) growth.

Ahead of Q4 results later today, ICICI Bank shares slipped 1.52% to Rs 271.40 on NSE. ICICI stock prices have been under pressure in the last two trading sessions which saw the stock price slide 1.76%.

Ahead of Q4 results later today, ICICI Bank shares slipped 1.52% to Rs 271.40 on NSE. ICICI stock prices have been under pressure in the last two trading sessions which saw the stock price slide 1.76%.

In the previous three-quarters, ICICI Bank has witnessed a continuous decline in net profits and a rise in provisions and gross non-performing assets resulting in a significant deterioration in asset quality and weak net interest income (NII) growth.

Motilal Oswal expects the Net Interest Income (NII) at Rs 5,432.8 crore, a sequential increase of 0.52% on-year basis and 1.29% on quarter basis. “Slower growth coupled with a YoY decline in NIM (due to lower C-D ratio) should lead to moderate growth in NII on a YoY basis,” Motilal Oswal said in a report.

“NII will likely benefit from better/sustained NIMs benefiting from lower funding costs,” Edelweiss Securities said in a note.

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Non-Performing Assets

Motilal Oswal expects Gross NPAs to remain high in 4QFY17, with the slippage ratio projection of around 6.5%. “Bulk of the corporate slippages would be from within the watch list. Outstanding watch list (fund based and non-fund based) stood at Rs 27,540 crore in 3QFY17,” the brokerage house said.

In an interview to CNBC-TV18, Darpin Shah of HDFC Securities said that management commentary on how the resolutions are happening in the large exposure accounts will be the key thing to watch. Shah expects NPAs to be roughly around Rs 7,200 crore.

Edelweiss Securities emphasised the importance of guidance for next fiscal by saying,” The indication/guidance on FY18 will be critical for future performance.” Edelweiss Securities said in a note.

Loan Growth

Edelweiss Securities expects the loan growth to be lower.

Darpin Shah of HDFC Securities is factoring a 8% on-year growth and a 3% on-quarter growth.

Motilal Oswal expects the loan growth to improve with a moderate corporate loan growth and a decline in international loan exposure. “We expect loan growth to improve to 9% year-on-year (YoY) and above 4% quarter-on-quarter (QoQ) basis, led by continued growth in retail loans, which have shown a steady pickup in the last two years. However, Corporate loan growth would be moderate and international loan exposure would continue to decline,” the brokerage firm said.

Non-Interest Income

For Non-Interest Income growth, Motilal Oswal expects it to be weak in Q4. The brokerage house expects a 8% on-year growth in Non-Interest Income, led by low corporate fees. “Moderate trading gains and one-off stake sale in previous quarters would reflect in lower overall non-interest income growth on a Quarter-on-Quarter/Year-on-Year basis,” the brokerage firm said.